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Improving Understanding of the Social Security OASDI Trust Fund


  • Schmult, Brian


This paper argues that the Social Security OASDI Trust Fund is widely misunderstood by the public, thereby corrupting the debate on how to handle future scheduled benefits, and increasing the risk of program changes that would not be accepted if people understood how the program functions. The Trust Fund is a fiscal nullity but appears to be regarded by many as essential, hence the public debate is about how to ``fix'' it, rather than about the moral question of {\it whether} to fund scheduled benefits, which are clearly affordable. This misunderstanding indicates the need for a shift in emphasis in public descriptions of the program. For this, this paper lays out a set of data, arguments and analogies that are asserted to be accurate representations of the OASDI program and Trust Fund operation, and which are proposed as tools for public education. Finally, this paper argues that an important step in shifting public debate is to re-institute full recourse to Treasury funding for any payroll tax shortfall, which will force the public debate back to benefit levels and revenue sources.

Suggested Citation

  • Schmult, Brian, 2012. "Improving Understanding of the Social Security OASDI Trust Fund," MPRA Paper 44227, University Library of Munich, Germany, revised 05 Feb 2013.
  • Handle: RePEc:pra:mprapa:44227

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    References listed on IDEAS

    1. Kent Smetters, 2004. "Is the Social Security Trust Fund a Store of Value?," American Economic Review, American Economic Association, vol. 94(2), pages 176-181, May.
    2. Martin Neil Baily & Jacob Funk Kirkegaard, 2009. "US Pension Reform: Lessons from Other Countries," Peterson Institute Press: All Books, Peterson Institute for International Economics, number 4259.
    3. Lafrance, Amelie & Larochelle-Cote, Sebastien, 2011. "Consumption Patterns Among Aging Canadians: A Synthetic Cohort Approach," Economic Analysis (EA) Research Paper Series 2011067e, Statistics Canada, Analytical Studies Branch.
    4. Barbara A. Butrica & Richard W. Johnson & Joshua H. Goldwyn, 2005. "Understanding Expenditure Patterns in Retirement," Working Papers, Center for Retirement Research at Boston College wp2005-3, Center for Retirement Research, revised Jan 2005.
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    More about this item


    Social Security; Trust Fund; OASDI;

    JEL classification:

    • H55 - Public Economics - - National Government Expenditures and Related Policies - - - Social Security and Public Pensions
    • H60 - Public Economics - - National Budget, Deficit, and Debt - - - General

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